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Wednesday, April 11, 2012

Legislative Life in Minnesota – A Microcosm of the United States –As Government Reaches a Near Impasse

State Struggles to Give Hundreds of Millions to Pro Football Team; Borrow Money for Jobs

Minnesota is one of the favorite states of any person who follows economics and politics. First of all it has a Democratic Governor and a Republican controlled state legislature. Also, all of the legislature seats are up for election this November, so it is a good test in a moderate state as to the staying power of Conservative Republican wins from 2010. In 2011 the state government shut down as a new budget could not be passed because the Governor wanted more spending on education and the like with some new taxes on the wealthy, and the legislature said no. Sound familiar?

To add to all of this is the issue of a new stadium for the Minnesota Vikings professional football team. It is a political issue because (1) the team wants the government to throw in at least $400 million and (2) if that decision were put to a popular vote the citizens would, rightly in our opinion, overwhelmingly reject such an expenditure of public monies right after education and other vital programs were cut to meet Republican demands for no new taxes. (well, other than new taxes to fund a football stadium, that is apparently okay with Republicans since the money will go to subsidize a very wealthy businessman).

Another interesting aspect of the political battle in Minnesota is whether or not to issue bonds to provide funding for infrastructure projects. Uh, wait a minute. State governments are required to have a balanced budget, so what is this ‘bond’ issue all about. Well in what surely must be a surprise to those advocates of a balanced federal budget who use as an example the fact that states must balance their budgets, it turns out states don’t balance their budgets. Instead over the years they have borrowed trillions of dollars.

Here is the issue in Minnesota.

The bonding proposal is creating division even among Republicans.

Moderates like Senate Majority Leader David Senjem, R-Rochester, see practical value in borrowing money to maintain the state's infrastructure and political value in landing prized projects for home districts.

Others, like Sen. Dave Thompson, R-Lakeville, remain dead set against the borrowing. Asked if he thought the state needed a bonding bill, Thompson didn't hesitate: "No."

The bonding bill is used, historically, to improve infrastructure, help local jurisdictions with projects like convention centers, and as a way to spur the economy. Even-numbered sessions typically have bonding as their primary objective, and with interest rates still at historic lows and the construction industry in the doldrums, passing up a bonding bill this session at the Capitol could carry some political risk.

And yes borrowing money at very low interest rates to invest in projects that will have benefits for decades and that will be paid for by the very persons who enjoy those benefits and will create jobs and economic growth sounds eminently reasonable, which explains the opposition of Conservative Republicans.

As for funding a football stadium for a privately owned pro football team worth in the billion dollar range, well that appears on life support even though Republicans are bending the rules to try to get it passed.

The nearly $1 billion Minnesota Vikings stadium project also needs a Herculean lift to get into the win column.

The stadium proposal has passed out of just one House committee and is stuck in its first Senate panel, unable to get the votes to move along.

Last week, the powerful House Rules Committee convened early in the morning to grant the proposal a special waiver for missing a key deadline.

One can only hope that the efforts to block taxpayer funding for billionaires is successful. It would send a nice message to Conservatives that every now and then they have to actually live up to their principles.